To ensure full compliance with its May 13 directive restricting wheat exports, the government has instituted a tighter physical verification process for all Letters of Credit. The Directorate General of Foreign Trade (DGFT) has issued an order requiring regional authorities to “physically inspect” all papers related to wheat export before issuing Registration Certificates.
The Ministry of Commerce and Trade had “prohibited” wheat shipments in its May 13 decision, but allowed them in cases where Letters of Credit were issued “on or before” that date. It was feared that unscrupulous elements would falsify Letters of Credit in order to prove their legitimacy and continue to export wheat.
If the LC date is on or before May 13, 2022, but the SWIFT message/message exchange date between the Indian and foreign banks is after May 13, 2022, Regional Authorities may conduct a full investigation and, if the messages are found to be ante-dated, immediate proceedings under the FT (D&R) Act, 1992 against the exporters may be initiated “According to the DGFT’s order. The Economic Offence Wing (EOW) and the Criminal Bureau of Investigation (CBI) will investigate the cases if necessary.
If any banker is found to be complicit in cases where ante-dating has been confirmed, legal action will be taken “as mentioned in the notification.
Supply to the U.S.
The order for stronger execution of the May 13 rule came just days after the USDA slashed the Indian wheat supply for the 2022-23 timeframe to 99 million metric tonnes (MMT). Wheat production in India would be at least 10-15% lower in March due to “heat stress,” according to a US agriculture estimate. According to the American poll, India may run out of wheat for internal consumption. The dealers’ more conservative estimate of Indian wheat production is 95 million metric tonnes, showing that the Indian agriculture industry is under increasing strain.
The USDA also noted that the Indian government has lowered the wheat component in the “subsidized distribution scheme,” implying that the government is reacting to the domestic wheat shortage.
According to the report, Uttar Pradesh was minimally affected by the March heatwave, but overall production was harmed because the heatwave shriveled wheat.
Despite the forecasted shortfall, India’s May 13 directive stated that it will sell wheat to “vulnerable” countries. This year, Bangladesh, India’s largest wheat export destination, is projected to get large cargoes as well.
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